Can you earn income passively with your crypto? Yes you can! Today we are going to take a look at one "crypto bank" where you can buy crypto, hold crypto in accounts that generate interest and even create a line-of-credit against your crypto holding.

News

https://cointelegraph.com/news/amc-theatres-mobile-app-accepts-dogecoin-shiba-inu-and-more

Crypto banks

Nexo.io

Crypto.com

Hold on.

Hey, everyone. No one on this podcast is a financial advisor, and all information presented

on this podcast is for informational purposes only. Now that we have the legal stuff out

of the way, let's jump on in. Welcome to the Generation of Wealth with Cryptocurrency

podcast. I'm your host, McIntosh, and today we're going to talk about earning interest

on your crypto.

So we're recording a bit late tonight. We've had some bad weather come through, and in

fact about an hour ago we had a tornado warning. Looks like it's mostly past, so hopefully

our power will stay on and everything will be good and we can get this out. So we will

begin talking about the news as normal. Not a whole lot this week or this time. There's

one thing that came up a while ago. It's been a bit at this point. AMC movie theater started

accepting some crypto for payment. Bitcoin, I believe, Ethereum, Bitcoin Cash, Litecoin

looks like back in November of last year. Well, just recently in the last couple of

days, they updated their mobile app to allow Dogecoin and Shiba Inu, among others. So the

meme coin people have made some progress. So congratulations guys if you own those coins.

I'm sure that they're going to be going up at least somewhat because of this. But just

wanted to get that out. Just, you know, of course, more integration of crypto into mainstream.

We'll take a quick look at the market. We had a fairly humdrum week, so to speak. Unfortunately,

the weekend has proven a little bit worse. We dipped twice in the last few hours really

in the last 24 hours or so. And we're at $38,900 right now for Bitcoin. So we're down on a

decent amount for the week. And $2922 right now for Ethereum. So Ethereum actually dipped

down into the very upper $2800. Bitcoin went down, it looks like, to about $38,600 or so.

Hopefully things will steady on for the rest of the night and we'll see next week where

we go. I think if you look back over time, you'll find that a lot of the weekend action,

so to speak, can be very erratic. The volume tends to be lower. And when large events are

going on, it can kind of move the market more than normal. Certainly something you want

to be careful about. So we're kind of at the edge of what Bitcoin is going to do. There's

a fairly major resistance level that we're at. And if it breaks this level, then we may

go down a couple more thousand actually until the next resistance level is met. We'll have

to see. Still kind of just like I've been talking about for weeks on end in this indecisive

area where it's just kind of bouncing along. Still very bullish things going on. Companies

like Terra Luna or the Terra Foundation, whatever their company is called, they're still continuing

with their large scale purchase of Bitcoin. More institutional adoption, this kind of

thing. And ultimately the price will go up. It's going to have to. There's still Bitcoin

and other assets like Ethereum moving off of the exchanges, which certainly indicates

that people are not selling. So we will see. All right. Let's talk about today's topic.

And today's topic in part is actually generated somewhat by the kind of way things are. You

may not really want to participate in this market. If you have a trader, you may decide

that you kind of want to cut and run. What's the best thing you can do with your assets

in the long term? We've talked about moving your crypto off the exchanges, putting them

into hardware wallets, certainly as a possibility. But when you do that, there's nothing wrong

with that, by the way. Absolutely nothing wrong with that. But it just sits. If you

put in 10 Ethereum or 10 Bitcoin, boy, if you have 10 Bitcoin, please ring me up. But

if you put that much assets in there and then you come back two years later, you're still

going to have what? The exact same amount. You're not doing any staking. You're not doing

any form of anything to generate new income, new crypto. And we've talked about staking

several times about different ADA you could stake, Ethereum you can stake. There's other

assets that you can stake as well. Specifically, we've talked about those. But what we're going

to talk about tonight is kind of another option that we've never really talked about. And

to be honest, I've somewhat shied away from it. And I want to be very clear about this.

What we're going to talk about is certainly a form of centralization. We're going to talk

about companies basically who manage some, or it's up to you how much, maybe some fraction

of your total assets or maybe all of your assets. That is completely up to you. But

they do things with it. They lend it out. It's like a bank, right? It's basically what

I would call a crypto bank. They lend it out. Maybe they use some of it for staking. They

do things with it. And in return, you get a return on your investment. So it's kind

of like when you, at least in the old days, when you would take money to the bank and

put it in a savings account and it would generate interest. These days, we really don't get

interest from those kind of accounts. But it's the same idea. The bank is not just sitting

your money there and it doesn't grow in the dark and the bank falls. They're doing things

with it. They're lending it out to other people for mortgages or whatever. They're making

investment back, and then some of that investment goes back to you for providing that capital.

It's the exact same concept. And I've shied away from talking about this for quite a while

because these were fairly new. In fact, the one that specifically we're going to talk

about only started in 2017, but they've grown a lot. If you look into these companies, they

typically will have insurance. So if something were to happen with them, in theory, most

likely you would receive ultimately your money back, right? You're not going to have to worry

about a situation like a Mt. Gox where people lost a bunch of money for years on end and

that kind of thing. But I kind of wanted to give them some time to prove themselves. And

I think they've done a fairly good job of that. So we're specifically going to talk

about a crypto bank called Nexo. Now, they're not the only one. In fact, I would, as a

point of reference, crypto.com is certainly very similar. Of course, you may have saw

their Superbowl ad this year. So there's more than one, and I would absolutely recommend

that you do your research if you're thinking about this, but this will give you a general

idea of what these companies are like. So how does this work? What are some of the options?

You can deposit essentially, much like a central exchange or crypto with Nexo. And again, like

I said, you could do part of your assets, maybe 10, 25%. I don't know. That's completely

up to you. I would say conservatively, I might not put all my money in one of these, but

that's certainly up to you. What are some of the returns that you would expect? And

I'm going to read off what they say. I can't promise you that this is what you would get,

but this is what they say that you get. Okay. So if I just deposit money, now with Nexo,

and you'll find this, I know this is true with crypto.com. It may not be true with every

bank. They're going to have their own token. Nexo has the Nexo token, crypto has the crypto

token, and they want to encourage people to use that token. So a lot of times they will

tie higher interest rates, better returns to users who own some of that token. Now that

is certainly different from a traditional bank. A bank doesn't have a token, right?

But you could also, a lot of times, buy an asset, Bitcoin, Polkadot, Ethereum, whatever,

from that bank. So it's essentially a centralized exchange as well. So it might be a place that

you're going to want to make your purchases from. I'm trying to find the interest rates,

the rates of return on these. I apologize. Oh, come on. I should have already had this

up. Oh, and while I'm looking this up, quite typically what we're seeing, quite typically

what you're seeing on one of these sites is they will offer credit cards. Crypto.com has

one. Nexo has one. And when you use a credit card for purchases out in the real world,

you actually get return in Bitcoin. I don't know if you can do other things besides that,

but you can get return in Bitcoin. Now with these interest rates, I'm going to tie this

to the lowest level. So basically if you didn't buy any of their token, again, you should

do your own research. Your interest is paid out daily. And it's going to vary depending

on what asset it is. Oh, give me a break Nexo. Really? I can't find their little chart. All

right. Maybe this is it. All right. This looks like this is it. So just to give you an idea,

and I think these are probably, I think these are annual percentage rates. They are computed

daily. But anyways, and this will most likely be the lowest level, but Bitcoin cash is 6%,

the BNB token, the Binance blockchain token is 6%. Bitcoin is 6%. Ethereum is 6%. Pax

is actually 10%. The stablecoin tokens are actually higher. That's interesting. USDC is

10%. US Tether, USDT, which is Tether, if I'm not mistaken, is 10%. It looks like in general,

most of them are around 6% with the stablecoins being higher. I don't know what Pax or DAI,

either one are honestly offhand. But it's actually quite interesting because if you

think about this, with our current interest rates of around 8.5%, not our interest rates,

our current inflation rates around 8.5%. If I part $10,000 cash in my bank account, come

back a year later, what have I done? Minimally, I've lost 8.5%. Arguably, it would actually

be higher than that in buying power. And we've discussed the interest rate thing a lot on

here, inflation rate, I should say. And I don't want to get off into that, but understand

that when you just leave your money in cash, you're losing value, certainly these days.

On the other hand, if I leave my money in Bitcoin or Ethereum, and in general, frankly,

the market has gone very much sideways for the last several years. But over the long

term, we know that the value of that asset goes up. But in addition, I'm getting more

of it. Now, I'm only getting 6% of my Bitcoin, but five years from now when Bitcoin is double

in value, plus I'm getting a 6% compound interest rate on top of that, that's true value.

You can use this as a way to generate some extra money. You might actually, and I've

never really thought about this. Well, I never really thought about this. You might wish

to use this as a centralized exchange. So you buy your Bitcoin, make your daily monthly,

weekly, well, you could do it daily purchases of whatever your crypto is, and stick those

in and have them generate interest. Now, you again might not want to stick all your eggs

in one basket, but that's a very common thing that you're going to see on sites like this.

And their rates may vary. You certainly would want to look that up before you put your money

in there. I'm just giving this as an example because it's a very well-known, it's a regulated

institution. They have insurance. It's not some fly-by-night operation. What are something

else that they can do? Well, I know with Nexo, you can actually borrow against your crypto.

Now, I would recommend that you be very cautious about this. I know people who've lost some

money because they'll borrow against their crypto. In fact, they'll borrow against their

crypto and use that to buy more crypto. And the reality is, if you have that, your levels

are off. Your crypto can lose value, which then means when you go to pay it back, you

kind of get in this vicious loop, and you can end up losing a lot of money like that.

But if you have enough assets in crypto, maybe you want to borrow against your crypto to

do something like buy a car rather than going to a bank and borrowing, and then paying

it back. And that's going to vary from company to company exactly how that works. And it

is not something that I would basically recommend most people, but it is an option. And just

like a bank, you go borrow against a bank. The problem is that you're borrowing against

an asset that can fluctuate in value, and we've seen large fluctuations in those values.

So you have to be very careful about that. You would not want to borrow a significant

percentage. I'm not going to borrow against 100% of my amount that I have. Now, can you

borrow against a stablecoin? You can. So I could have a USDC token, for example, which

is generating 10% return. So USDC, it's a stablecoin. It's pegged to the US dollar.

And so let's say I had $10,000 of that in my account. Well, I'm generating 10% return

on that per year, so that's $1,000. It would actually be more than that because it's compounded.

The interest is calculated daily, but just as a round number. So I'm going to get $11,000

the first year. But in addition, I could borrow against that and the interest rate on that.

If I'm not mistaken, I think I'm not crazy at this. It is 0%. They could be paid back.

The loans, this actually says basically you're getting a line of credit and they can be paid

back with fiat currency, by bank wire or with cryptocurrency. So you have a couple of options

about how you could actually pay that loan back. I'm trying to find the lending rate.

And I actually, I swear, I saw that it was 0%. I might be very mistaken in that. So I

don't want to just say that that's what it is. And I do not see it in my sheet here.

So I don't want to be running around saying incorrect things. So that would certainly

be something you want to look into. But I will say this. I think we're going to see

very high interest rates over the next few years. As interest, as inflation rates go

up, and as I've said, and I still stand by this, I don't think we're done with the inflation

rates. I think they're going well over 10%. We're going to see interest rates climb. We've

already started to see the mortgage rates climb here in the United States. And I'm sure

that will continue at least for a while. This might be an alternative to that if the interest

rate on that loan is not crazy. And I don't think it is. Again, you have to be very careful

with that. But it is something maybe for smaller things. I'm not sure I would recommend that

anybody go out and buy a house with a loan like this. Although if you had a sizable enough

crypto investment portfolio, it would certainly be possible. I just would encourage you again

to be very careful. But to wrap this up and get us home, I would just say that as your

portfolio grows, as your holdings grow, this might be something that you want to look into.

Maybe use it if you're buying on a regular basis. Maybe you use this as a centralized

interest exchange, for example. And then as you buy, you shovel it into this interest

bearing account essentially. And then you choose at what level you're going to keep.

Am I going to keep 25% on this exchange? And am I going to move the rest to a hardware

wallet or whatever? That is strictly up to you. That is, by the way, I know maybe I say

things like this a lot. I would just point out that to me, you having control of your

money is the heart of decentralized finance. I want to repeat that and make sure that you

hear it. You having control of what you do is the heart of decentralized finance. I can

go down to a bank and argue to them till I'm blue in the face about the things that they're

doing that are wrong, or I can take my money and I can do something with it myself. And

when I have it on Nexo, Nexo has a bit of control. They're not my keys. It's not my

crypto as the saying goes. I am, they're the custodian of my money, but in return for that,

I'm getting interest, right? I'm actually getting a return on my investment for just

quote, sitting there, right? And I can certainly keep it in my own hardware wallet. So that

choice is really up to me as the end user. And that to me is what DeFi decentralized

finance is all about. So keep that in mind as we're talking about this, I can't tell

you what to do. But if you've got a decent amount of money and you're looking to, you

want to generate interest, you want to generate return on that investment, and you know that

going down to the bank is probably not going to be good for you in the long run, right?

Put it in a savings account and get 1%. Yay. And I'm sure as interest rates go up, eventually

they will start raising their interest rates on savings account. But it's never going to

come close to matching even what the inflation is, much less getting a real return on that.

And if I have crypto assets that over time go up, I have a good chance of that actually

of coming out ahead. Imagine that, right? I put money in and 10 years later, I've got

more money and more spending power really than when I started, right? Because you have

to keep up with inflation just to be able to keep the same spending power. I hope that

makes sense, right? 10 years ago, I could spend a lot less money on rent and get the

same level of house that I can right now. That's inflation, pure and simple. So anyways,

I hope that was helpful. Just kind of a little short summary. I would highly recommend that

you go do your own research. I'm going to include a link for Nexel and for crypto.com.

There are others out there. Please do your own research and I am not recommending what

you do. And I want to make that very clear, even more clear than normal. Okay. But something

that you might want to take a look at. So the Generational Wealth of Cryptocurrency

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